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State Name: New Jersey
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State Abbreviation: NJ
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Mortgage rates continued higher today adding to a losing streak that has only seen one day of improvement in the last 9. Rate sheets now most closely match those seen on May 10th. The most prevalently quoted conforming 30yr fixed rate for best-case scenarios (best-execution) is back at 4.25% for the second straight day. Most borrowers will still see the same rate as was quoted yesterday, but with higher closing costs. The increase equates to 0.02% in terms of rate.

While yesterday's trading activity didn't really make much of a statement about the current state of events for mortgage rates, today confirms recent moves higher. In other words, we could have held out some hope that markets were just digesting last week's big events and that rates might still snap back lower. Today builds a case against any quick moves lower, and begins to make last week's only positive day for rates look like an outlier in an otherwise determined trend higher.

On a positive note, we're NOT seeing any huge movement in either direction for now. That decreases the pain involved in missing the opportunity to lock. It also limits the incentive to float. For the sake of perspective, keep in mind that May 10th rates (also today's) were close to the lowest seen in 2014 before that point, and the lows that followed never went more than an eighth of a point lower.

Loan Originator Perspective

"Do not be compelled to make a decision on floating or locking based on
those that claim they know what they market will do. Everyone's
situation is unique. Instead, take a look at your situation and talk to
your Loan Officer about events that *possibly may have an impact* on
rates (better or worse). No one is psychic, so if you are happy with
your current rate, and don't want to lose out on that rate, then lock. " - Ira Selwin VP of Capital Markets - US Mortgage Corporation

"Rates worsened today for what seems like no discernable reason. For
short term closings it probably means you need to take risk off the
table and get your rate locked. If you have a longer time horizon (45
to 60 days perhaps) floating here is probably worth it. If we can hold
here and not break through our range to even worse levels short term
than I think we can easily rally which would create a locking
opportunity. No guarantees of course so stay tuned in." -Hugh W. Page, Sen. Mortgage Consultant, Capital Partners Mortgage

"As I say often, locking your rate is the best way to avoid higher rates
like we’ve seen the last week or so. The recent rate dip has all but
vanished and hoping we will see a reversal soon could be wishful
thinking, in my opinion. " -Michael Owens, VP of Mortgage Lending at Guaranteed Rate, Inc.

"Day to day, I'd strongly consdier floating. The reason for my opinion
is that a less valued auction went fairly well today, and we have the
all important 10 year auction tomorrow. I think a good auction tomorrow
will have us improving over the next week." - Brent Borcherding, www.brentborcherding.com

"Last couple days have not been good for mortgage rates. We did have a
pretty solid treasury auction today but tomorrow's 10 year note auction
is much more important. With the amount of losses over the last couple
days, and some support just over head, I think it is worth the risk to
float until tomorrow and see if we can rally after the auction." -Victor Burek, Open Mortgage

Today's Best-Execution Rates

30YR FIXED - 4.25%

FHA/VA - 3.75%

15 YEAR FIXED - 3.375%

5 YEAR ARMS - 3.0-3.50% depending on the lender

Ongoing Lock/Float Considerations

The Fed has stayed the course on their $10bln per meeting reduction in bond buying, though markets have handled it relatively calmly compared to the days of "coming to terms with tapering" in 2013.

Rates fell significantly in January, leveled-off in February and took choppy steps higher in March. From there, they settled into a flat range mostly consisting of 4.375 and 4.5%, but with occasional forays to 4.25 and 4.625%.

The bias had been very slightly toward higher rates, it reversed course in early April as expectations grew concerning European Central Bank easing. On several occasions, those expectations would go on to overwhelm domestic economic data--normally the main source of guidance for market movements.

As of the third week in May, rates were as low as they've been since June 2013, more than confirming a break below the 2014 range. They remained in that range through month-end and grew more volatile ahead of the June 5th European Central Bank Announcement.

Looking back at recent movement, it's had a disconcertingly small amount to do with 'normal stuff' like economic data and Fed policy. Temporary and unpredictable factors currently account for too much of the movement to make firm bets on rates moving either direction in the short term.

(As always, please keep in mind that our Best-Execution rate always
pertains to a completely ideal scenario. There are many reasons a
quoted rate may differ from our average rates, and in those cases,
assuming you're following along on a day to day basis, simply use the
Best-Ex levels we quote as a baseline to track potential movement in
your quoted rate).

About the Author

A former originator, Matthew began writing for Mortgage News Daily in 2007, covering a wide range of topics. Seeing a need in the marketplace, his focus increasingly shifted toward relating MBS and broader financial markets for loan originators.
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